What Is a Trustee?

A trustee is an individual or organization that manages property or assets for the benefit of a third party. They may be appointed for various purposes, including administering trusts in bankruptcy, managing retirement plans, or overseeing assets for minors or individuals unable to manage their own affairs. Trustees are responsible for monitoring financial accounts and investments within the trust, ensuring they align with the trust's objectives.

A trust is a legal arrangement in which a settlor transfers ownership of assets to a trustee, who manages them for the benefit of beneficiaries. Trusts can be created for various purposes, such as providing legal protection for assets or ensuring appropriate distribution according to the settlor's wishes. The trustee ensures that these wishes are fulfilled.

Trustees have a fiduciary duty to act in the best interests of the trust's beneficiaries. This means that they must make decisions that prioritize the beneficiaries' needs and manage the asset.

Key Takeaways

• Appointment: Trustees are often designated by the original owner of the assets, known as the settlor. In some cases, a court may appoint a trustee.

• Definition: A trustee is an individual or firm that holds and manages property or assets for the benefit of a third party.

• Duties: Trustees have a fiduciary duty to act in the best interests of the beneficiaries while managing the trust assets with the highest standard of care and loyalty, including prudently investing and protecting the trust assets, ensuring that they are distributed referencing to the terms of the trust deed and letter of wishes. The trustee must avoid conflicts of interest and act impartially, treating all beneficiaries fairly and without favoritism.

• Purposes: It can be estate planning, asset protection, charitable giving, and ensuring the efficient management and distribution of assets.

• Types: Revocable or Irrevocable Trust, Fixed or Discretionary Trust.

• Responsibility: Trustees have a fiduciary duty to act in the best interests of the trust beneficiaries, making decisions that prioritize their needs.

Responsibilities of a Trustee

All trustees have general responsibilities, regardless of the specifics in the trust deed. These include:

• Act as a Fiduciary: Administer the trust in reference to the settlor's wishes and in the best interest of the beneficiaries.

• Ensure Asset Safety: Safeguard all funds and assets within the trust, due diligence process for the beneficiaries and keep up-to-date records of trust assets and beneficiaries’ information.

• Administer the Trust: Manage the assets for the benefit of the beneficiaries, maintain accurate records of all transactions.

• Reporting Obligation: Report to the relevant regulators as necessary.

• Make Decisions: Make informed decisions about the assets as circumstances change, always aligning with the settlor's intentions and the benefit of the beneficiaries.

• Invest Assets: Invest, allocate, or adjust assets in line with the settlor's wishes and the trust's objectives.
  
  

Types of Trustees

When selecting a trustee, you may choose someone you know personally, but it is often beneficial to appoint a licenced trustee with experience. A trustee should be knowledgeable about the trust being established and fully understand their responsibilities.

There are generally three types of trustees:

• Individual Trustee: Selecting a knowledgeable individual to manage a trust's assets is essential, but their eventual death can disrupt continuity in administration.

• Institutional Trustee: Many large financial institutions offer trust management services, with professionals providing support on legal, admin, account, compliance, tax etc services to the clients.

  
  
  

Who to Choose As a Trustee

Choosing a trustee might be one of the most challenging tasks when creating a trust. It's tough to know which person or entity you can trust to administer your assets the way you want them to. Here are some considerations for choosing a trustee:

• Wealth Management/Trust Company: Appointing a professional trust company such as UTGL (a licensed trust company) can provide you with peace of mind, knowing your assets are managed by experts. UTGL has experienced finance professionals, attorneys, and accountants who will administer your trust in strict accordance with your wishes. With connections to over 50 global licensed and regulated securities firms, UTGL offers personalized wealth management strategies, ensuring your assets are preserved and grown for future generations.

• Friends or Family: You can choose a trusted friend or family member, but you'll need to ensure they are up to the task of administering your trust. Additionally, they'll need an iron will to withstand the drama and resentment that can arise when a family member is in charge of large sums of money and won't give any out on demand. This person must also be willing and able to continue the task as long as the trust exists. Lastly, you'll need to consider and appoint an alternate in case something happens to the primary trustee. This ensures your trust is administered by someone you choose rather than having the courts choose for you.

• Trust Attorney/Lawyer: A trust attorney can be a good choice as they are familiar with trust laws in your state and be a reliable trustee. However, they may not provide comprehensive fiduciary trust services to clients especially management of trust assets have to focus on the trust administration, assets transfer in and out, or investment as mentioned in the letter of wishes, which trust attorney may not be able to handle. Additionally, it may be costly to hire an attorney to manage the trust assets.

  
  
  

Key Considerations When Choosing a Trustee

A trustee is someone entrusted with the fiduciary duty of managing assets placed in a trust. There are many reasons to place assets in a trust, including securing income for later years, growing wealth for your family, and ensuring assets are distributed as intended after you pass away.

Every jurisdiction has specific laws governing trusts and how they should be administered. Reach out to us at UTGL and we can assist in giving you advice about the suitable trustee to manage your assets.